In business, there are different categories of assets and each item that is purchased for the business falls under any of these categories, a vehicle would be under the fixed assets and this article will give step by step instructions on how to record a vehicle purchase in QuickBooks.
Steps on how to record purchase of a vehicle in QuickBooks:
- Open the QuickBooks and then the company under which you want to record the asset.
- Go to the section Home, press Ctrl-A to open the chart of accounts and then for a new account press ctrl-N.
- Once that is done a new window will open with the title ‘add new account’
- Beside the Account Type select ‘Fixed Account’.
- For the Account Name give name of the vehicle you bought.
- Next click on ‘Save & Close’.
- This will open another window with ‘Chart of Accounts’.
- Press Ctrl-N once again so that the liability account can be opened for loan and choose the loan type.
- Once again the Add Account window will open select the type of loan, e.g. ‘Short Term Liability’ or ‘Long Term Liability’ from the drop down menu.
- Next type the name of the loan, e.g. Vehicle Loan beside the ‘Account Name’.
- Next click on ‘Save & Close’
- Furthermore, it is possible for you to add two additional accounts, such as a sub account for depreciation of the asset and another sub account that is for the loan interest.
Two ways to record your purchase:
- The easiest is doing a journal entry, mainly if financing is there. Debits and the credits can be entered into the journal manually.
- Many people might not be comfortable with doing the manual input of debits and credits then to do the accounting you can use the forms that are available in QuickBooks. However you might not want to use it in case it is being financed and funded simultaneously with the purchase and online banking is being used. As there will be transaction that might not reflect on the bank statement.
Journal Entry to Record the Vehicle Purchase
- Open the company page tab and from the menu select ‘Make General Journal Entries’
- Under the Account add the vehicle name and write under the memo as Vehicle purchase.
- Under the Account once again type ‘Vehicle Loan’ if required and type under the Memo section again.
- Next under the Account, write the name of the bank to record the down payment.
- Next under the Debit section write the purchase price of the vehicle
- Next under the Credit section write the amount that has been loaned by you beside the vehicle loan category.
- Put the down payment amount for the Bank under the credit section beside the name of the bank.
- Then save & close.
- Next you can generate the balance sheet from clicking on the Reports Menu and select ‘Company & Finance’ and then click on Balance Sheet Standard.
- This will then open a new window showing the purchase details.
Entry Through Forms
- Open the QuickBooks Company page, and click on record Deposits.
- A new vendor needs to be added and then put the name for which the loan and then the memo and the loan amount. Then Click and Save
- To Purchase the vehicle, click and open “write a cheque”. Add a vendor, name the vehicle under the Account and the purchase price. Then save it.
- Generate the Balance Sheet again and it will show the record of the purchase.
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If you come across any issue regarding a vehicle purchase in QuickBooks, then feel free to get in touch with the AskforAccounting QuickBooks payroll support providers at their tollfree number.